_____59. Keynes theory on precautionary demand for money was that: if interest r
ID: 1209151 • Letter: #
Question
_____59. Keynes theory on precautionary demand for money was that:
if interest rates rose, precautionary demand would increase.
if income rose, precautionary demand would decrease.
if income rose, precautionary demand would increase.
if output rose, precautionary demand would increase.
if aggregate demand rose, precautionary demand would increase.
_____60. A rise in the market interest rates on bonds would result:
in a capital loss on previously existing bonds.
an increase in demand for previously existing bonds.
in an increase in the transaction demand for money.
in a capital gain on previously existing bonds.
in an increase in the price of previously existing bonds.
_____61. According to Keynes’s theory high unemployment during the 1930’s in most industrialized countries was a result of a deficiency in:
income.
real wages.
government spending.
aggregate demand.
business investment.
_____62. An example of Keynesian expansionary fiscal policy action would be:
an increase in personal tax rates designed to lower disposable income.
lowering interest rates in order to stimulate business investment.
an increase in personal saving rates due to an increase in the yield on bonds.
an increase in government spending on public works as a cure for unemployment.
an increase in the supply of money in order to increase present consumer consumption.
_____64. According to Keynes’ theory on the rigidity of money wages an employer during periods of falling output and profits would:
cut the level of money wages rather than the length of the work week.
continue to operate at a loss until economic conditions improve.
wait for voluntary layoffs among the workforce.
all of the above.
none of the above.
Explanation / Answer
Answer 1) Keynes theory on precautionary demand for money was that:
if income rose, precautionary demand would increase. this is because the precautionary demand for money is income determined and is relatievely stable. but this is also true that it is interest inelastic.
Answer 2) A rise in the market interest rates on bonds would result:
in a capital loss on previously existing bonds. Market interest rates are likely to increase when bond investors believe that inflation will occur. As a result, bond investors will demand to earn higher interest rates. The investors fear that when their bond investment matures, they will be repaid with dollars of significantly less purchasing power.
Answer 3) According to Keynes’s theory high unemployment during the 1930’s in most industrialized countries was a result of a deficiency in:
beacause of lack of aggregate demand. so the producer had no more profit and the market failed there was no emnployment because off access supply over demand.
Answer 4) An example of Keynesian expansionary fiscal policy action would be:
an increase in government spending on public works as a cure for unemployment.
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.